Qantas Employees Sue Carrier Over Complex Bonus Scheme

You’d think that a large cash bonus would be welcomed by employees, but as Australian carrier Qantas found out this week, things are rarely that straightforward. Employees, through the Australian Council of Trade Unions (ACTU), are legally challenging Qantas, calling the bonus scheme a ‘sham’.

qantas employee bonus scheme
Unions are taking Qantas to court over $67 million worth of employee bonuses. Photo: Wikimedia Commons

In their end of year reporting, CEO Alan Joyce introduced the scheme, saying,

“In years when the business has achieved a truly standout result, we’ve been able to reward our non- executive employees with a bonus.  This year, we have set aside a further $67 million to reward up to 27,000 non-executive employees with a bonus of $2,500 each.”

The AUD$2,500 cash bonus is made up of $2,000 for full time staff plus $500 of travel credit. For part time staff, that amount falls to $1,500 plus the travel credit. Only non executive members of staff were eligible, but the real problem is that only staff signed up to their enterprise bargaining scheme (EBA) are allowed to take part. 

What is an EBA?

An EBA is an agreement on the terms and conditions of employment. They are fairly common in Australia, and can be beneficial to both employer and employee. However, the way Qantas has handled the process of getting employees signed up has aggrivated the ACTU.

According to ACTU, the $500 travel credit was given to everyone right away, while the $2,000 was withheld pending sign up to the EBA. Those who were not employed under an enterprise agreement, who are mostly management staff, were given their bonus right away.

ACTU argue that, for some employees, there could be a wait or around two years. If, during this time, they are made redundant or leave, they would be denied the bonus entirely. They also say that workers have not seen the details of the scheme, and question why people would want to sign up without viewing the specifics first.

ACTU secretary Sally McManus had this to say,

“Qantas is trying to pressure people into supporting an as-yet unseen agreement in return for a bonus payment freely given to managers. People working at Qantas have endured pay freezes and huge staff reductions. The company has lifted its financial performance on the back of their work, yet Qantas management want to use their bonus reward as leverage instead of recognition.”

ACTU launched legal action in the Fair Trade Commission on Monday 24th June asking that the bonus be paid immediately.

Unhappy unions are not new at Qantas

Qantas has a long and storied industrial relations history.

In the last forty years, union membership in Australia has fallen from above 50% of the workforce to 14%. But union membership levels in the aviation sector are higher than the norm. The union representing the bulk of Qantas employees, the Australian Services Union (ASU) has even managed to grow slightly in the last five years.

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Qantas has always had higher than normal levels of employee unionisation. Photo: Google Images

Historically, Qantas was known for its high employee costs. When the present CEO, Alan Joyce, arrived at Qantas in 2008 the airline was haemorrhaging cash. Joyce set out to transform the airline and reduce costs.

Part of that was reigning in employee costs. Dark stories circulated, such as Qantas engineers being miffed when their demands for free Qantas Club membership included in their employment conditions where knocked back. Qantas isn’t afraid to stand its ground in a dispute, as we’ve seen in their ongoing row with Perth Airport.

Famously, in October 2011, Alan Joyce shut down the airline for the weekend in order to bring crippling industrial action to a close. It was drastic action, but it worked, effectively bringing the unions to heel and curbing their more outrageous demands. 

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Alan Joyce shut down the airline and was going to lock staff out the terminals in October 2011. Photo: Wikimedia Commons

While every employer has an obligation to provide a safe workplace, fair salary, and decent conditions to their employees, unions in Australia have a habit of expecting too much. In a statement provided to Simple Flying, a spokesperson for Qantas said:

” It’s bizarre that the ACTU is taking action against an employer who is setting aside almost $70 million for discretionary bonuses, especially when it’s in addition to wage increases of up to three per cent …. This is ultimately shareholders’ money and the ACTU is doing a good job encouraging us to abandon these discretionary bonuses and simply return the money to shareholders in future.”

The current Australian Government, businesses, and much of the Australian public are not overly impressed by union over reach and bad behaviour. There is a concerted legislative and sociocultural effort to rein the unions in.

What’s the forecast?

Alan Joyce plans to stick around for the next few years. He knows he has government backing as he attempts to deal with the unions. Mr Joyce says that the last four discretionary employee bonuses have been paid in a similar way, linked to an EBA, and with conditions attached. As the CEO notes, it’s nothing new.

“It’s something we’re well within our rights to do.”

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Qantas CEO Alan Joyce. Photo: Qantas

Another airline shut down is unlikely. The current dispute is not nearly as serious as the 2011 issue. Pushy unions are a fact of life for most airline companies. In Taiwan right now, EVA Air is locked in a dispute with its cabin crew and strikes are threatened.

Qantas and Alan Joyce should not be underestimated. They are not afraid to take a stand in industrial relations matters. The unions and militant employees, badly singed in 2011, know this.

One suspects Qantas will simply end up shrugging this off. The losers will be the majority of employees who work hard, heads down, and get on with things. It’s their bonuses the union are playing with.